Most Irish Firms Expect Brexit Impact

by Jason Gorringe, Tax-News.com, London

13 September 2017

A new survey by PwC has revealed that Irish CEOs are keen that the Government have a clear national strategy for dealing with Brexit, as an issue that is impacting business confidence levels.

According to PwC's 2017 CEO survey, 58 percent of CEOs regard the economic outlook for the year ahead as favorable, compared with 71 percent in 2016.

Of those surveyed, 89 percent saw Brexit as effecting their outlook, while 81 percent cited the potential impact of US policies. CEOs also felt that ensuring that Ireland has a clear national strategy for dealing with Brexit should be Government's top priority.

Other areas that were seen as potentially impacting future business growth included Ireland's high personal tax burden (93 percent), rising wage costs (88 percent), and cyber threats (86 percent).

The percentage of CEOs planning to grow revenues also fell, from 84 percent last year to 75 percent, as did the number of those intending to grow profits (74 percent to 64 percent). Of those CEOs representing companies that export, 28 percent said they expected to increase their exports by 20 percent or more in the year ahead.

Commenting on the launch, Feargal O'Rourke, Managing Partner, PwC Ireland, said: "The confidence level is down slightly on last year, but this is hardly surprising given concerns relating to Brexit and other geopolitical factors."

"But uncertainty also brings opportunity, and many Irish CEOs do see opportunities arising. Not surprisingly there is a strong focus on export markets. Overall, in weighing up the opportunities and uncertainties, CEOs are slightly more cautious in their outlook with a consequent impact on the pace of investment decisions. Nevertheless, they remain focused on the growth potential of their businesses."

Frances Fitzgerald, Deputy Prime Minister and Minister for Business, Enterprise, and Innovation, added: "There is no doubt… that Brexit is a key concern for policy makers and business leaders. This Government is doing everything possible to respond strongly to the impacts of Brexit by working with international and local stakeholders to provide support to business and safeguard Irish jobs in every part of the country."

There was more positive news on the FDI front. PwC said that Ireland "continues to provide an excellent environment for multinationals to establish global business operations to sell to Europe and further afield." It explained that a record 96 percent of survey respondents deemed their investment in the country a success, with 91 percent intending to either maintain or increase the investment.

Among the issues cited as reasons for preserving their investment in Ireland were: the retention of a competitive corporate tax rate (58 percent); a positive outcome for Ireland in the Brexit negotiations (33 percent), and a reduction in the personal tax burden (29 percent).

Joe Tynan, Head of Tax, PwC Ireland, said: "Ireland continues to be the number one location in Europe for FDI. Companies choose Ireland for a number of factors including its successful track record and the consistent and low corporate tax rate of 12.5 percent."

"Companies require the best talent to compete. Ireland, in [contrast with] other countries, is considered more welcoming to employees from across the EU. This allows companies to establish here and to serve all of the EU – in their own language."

"The changing international tax landscape is a positive for Ireland. It is requiring companies to earn their profits where they have substantial operations. This is reducing the attractiveness of Caribbean tax havens and also reducing the attractiveness of countries who agree tax liabilities based on a ruling."

"It is enhancing the attractiveness of Ireland which offers a low corporate rate and the ability to set up substantial operations here."

IMPORTANT NOTICE: Wolters Kluwer (BSI) Limited has taken reasonable care in sourcing and presenting the information contained on this site, but accepts no responsibility for any financial or other loss or damage that may result from its use. In particular, users of the site are advised to take appropriate professional advice before committing themselves to involvement in offshore jurisdictions, offshore trusts or offshore investments.

The Tax-News brand is owned and operated by Wolters Kluwer (BSI) Limited.